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We’re once again suffering a bout of stock market indigestion–hardly surprising after a robust two-year market rally. We’ve enjoyed healthy returns since October 2022. Now it’s time for a taste of risk. Indeed, today, the Nikkei Stock Average fell 12.4%, its worst one-day performance since 1987.
No doubt market pundits will start focusing intently on what the Federal Reserve will do in September, and whether indications of economic weakness will result in a larger-than-anticipated interest rate cut. The good news: With short-term rates so high, the Fed has plenty of fire power.
My question for my fellow HumbleDollar denizens: What do you say to yourself at times like this to keep yourself invested in the stock market? Perhaps your mantra or mantras might help your fellow readers.
I’m late to this post but after Friday 8/9 we’re basically back to where markets were before Mondays rout!
My retirement portfolio is invested/ managed in various strategies and instruments through my Financial Advisor that I can’t easily change. I am comfortable with this arrangement and my asset allocation and really don’t worry about short term blips in equity markets. Knowing there is nothing I can/ need to do removes the emotional response some might have in volatile markets.
Easy, keep investing. There is a story on a young boy asking the great financiier JP Morgan what the market was going to do. His reply:”fluctuate, my dear boy.’
I keep this list of “on average” expected market declines posted above my computer:
-5% 3 times per year
-10% every year
-15% every 4 years
-20% every 6 years
-30% every 18 years
And when making decisions always ask myself: “Am I invested in such a manner that I will be financially and emotionally OK during these events?”
Warren Buffet keeps billions of dollars in cash when he can’t find worthy investments selling at reasonable prices. He doesn’t seek to be fully invested at all times.
But when the market drops and share prices decline, he’s “like a kid in a candy store” scooping up the shares of good companies selling at bargain prices.
My mantra: If it’s good enough for Warren, it’s good enough for me.
A fun mantra I suppose, but in reality what Warren does with Berkshire Hathaway’s money is of little relevance to me (except as a shareholder). Warren and his team’s resources and skill in doing what you describe is far superior to mine, and Berkshire’s investing horizon is far longer than mine, or that of anyone here.